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The idea behind MLB revenue sharing is to take money away from teams that make a lot of money and give it to teams that don't make a lot of money. This is done in an attempt to lessen the difference in the amount of money the richest teams make, and subsequently can spend, in comparison to the poorest teams. Through the end of the current Collective Bargaining Agreement (2011 season), all 30 teams pay 31 percent of their local revenues into a pot each season. This pot is then evenly distributed among the 30 teams. A team in New York or Chicago will pay more into this pot than a team in Tampa Bay or Kansas City. MLB distributes a portion of their Central Fund, which is comprised from sources like the television contract with the various networks, among the 30 teams with the teams that have the lowest revenues getting the most money. There is also a 'luxary tax' where a team must pay into a pot a percentage on the portion of their payroll that exceeds a pre-set limit. The Yankees usually have to put money into this pot due to exceeding the pre-set limit on payrolls ... in the 2008 season, the Yankees contributed $21.6 million into this pot. This money is distributed to teams with lower payrolls.

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Money sharing between owners and players

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Q: What is revenue sharing in Major League Baseball?
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